Commentary

Amazon, Walmart, And Wingtip: Size (And Loyalty) Does Matter

A few weeks back, Amazon announced earnings, and quietly surpassed Walmart in market valuation. How was this not bigger news?   When I wrote this article, Amazon’s market value was estimated at about $244 billion, while Walmart’s estimate was around $229 billion — which means a virtual store is worth more than the world’s largest physical store.

I remember when Amazon sold books and its largest competitor was Barnes & Noble – do you?  That feels like it was just yesterday.  When Amazon started selling other products, many people scoffed at the idea of expansion, but Jeff Bezos had a vision and so far his vision has paid off.  I’d venture to say he’s somewhat of an overlooked genius, if there is such a thing.

The reports also stated that about $1.8 billion in Amazon revenue was generated through the AWS, or Amazon Web Services, unit.  AWS provides scalable data and cloud services.  This is no small thing, since it shows how important Amazon is to the back end of the Web, as well as the front end of the commerce side.

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Walmart owns an enormous physical footprint, when you tally up all its stores across the U.S.  In fact, I’ve heard that McDonald’s, Walmart and the Vatican are three of the largest real estate owning-companies in the world. I wonder what the future holds for companies like Walmart as it continues to battle in the world of digital?  I know the company invests heavily in the Web and does ton of things right, but its competitive disadvantage is that it has shelf space to maintain — while Amazon \doesn’t.  Amazon can sell anything to anyone, including cloud-computing space, while Walmart still has to maintain inventory control in its stores.  It can have something for everyone, but it can’t have everything for everyone, and therein lies the challenge.  

I’m not implying Walmart is in trouble. It’s most certainly not.  The argument is more like the old debate between digital media and TV: Will digital kill TV?  The answer is no, but it will lay the foundation for an evolution and merger of ideas to create new efficiencies.  Amazon may have made a missstep in its recent “Prime Day” promotion and got called out on social media, but next year it will have have learned and improved.  

What will companies like Walmart take away from that?  Can they develop other ways to increase buy rate and sell products during times of the year that were previously slow?  Can they create new reasons for consumers to spend?  Amazon Prime is an amazing loyalty program that has extended into other ways to create customer loyalty, offering media and entertainment in addition to free shipping.  What can brick and mortar retailers learn from these strategies about ways to inspire loyalty?

Here in San Francisco we have a store called Wingtip, which has  found amazing ways to inspire customer loyalty, offering customers membership in a club that provides  a restaurant and bar, special events and lots of fun amenities.  The club brings people in, and it creates revenue all on its own.  Is this the wave of the future for other brick-and-mortar retailers?  Are Amazon and Wingtip the model for the future of commerce?

It seems as if loyalty as well as selection are what will differentiate commerce giants in the future.  Finding new ways to provide a customer benefit and a tighter customer experience are huge differentiators.  Amazon gets it.  Wingtip gets it.  I’m sure Walmart gets it.  What will they think of next?

1 comment about "Amazon, Walmart, And Wingtip: Size (And Loyalty) Does Matter".
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  1. Leonard Zachary from T___n__, August 12, 2015 at 12:37 p.m.

    Amazon does have shelf space to maintain - its embedded in their warehouses especially when you examine their smakker skus. However it is the most efficient shelving mankind has ever seen.

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